A U.S. federal appeals court ruled today that the famous French luxury shoe designer was entitled to trademark protection of its signature fire-engine red soles, with certain limitations.

The 2nd U.S. Circuit Court of Appeals in Manhattan ruled that Louboutin was allowed to protect its brand against red-soled shoes produced by Yves Saint Laurent S.A.S., another Paris-based luxury designer, but it instructed the U.S. Patent and Trademark office to limit Louboutin's registration "to uses in which the red outsole contrasts with the color of the rest of the shoe," meaning that if Yves Saint Laurent were to use a red sole on a red shoe, it would not infringe on Louboutin's trademark.

"It is the contrast between the sole and the upper [part of the shoe] that causes the sole to 'pop,' and to distinguish its creator," the appeals court wrote.

This decision overturned a district court judge ruling last year that went against Louboutin, saying that one color could never serve as a fashion brand trademark, even though the U.S. Patent and Trademark office had granted Louboutin protection in 2008.

In response to the court ruling, Louboutin told ABC News in a statement that they were "extremely pleased and gratified that the Appellate Court found our key arguments to be correct: first that color can and does serve as a trademark in the fashion industry, and that Christian Louboutin's world famous Red Sole trademark is valid, protectable and enforceable."

"As we have said throughout these proceedings and we reiterate now, especially in the light of this decision, we will continue to take all steps available to protect our trademark," the statement said.

Attorney David H. Bernstein, who represented Yves Saint Laurent, told the Associated Press that the ruling was "a total victory for us," since the company would be able to continue making all-red shoes.

The court battles over the bright red window into Louboutin's sole arguably put an entire shoe empire at stake.

Louboutin sells more than 650,000 pairs a year, and his shoes don't come cheap. The sexy, sky-high heels can sell for $495 and up -- with a crystal-encrusted pair costing $6,000. They have been seen on the feet of many of Hollywood's elite, including Angelina Jolie, Scarlett Johannson and Jennifer Lopez (who has a song about the shoes called "Louboutins"). Even Barbie dolls have their own custom mini-sized Louboutins.

"Well, you know, it's, to be copied can be sort of taken as a compliment, but when it's to be really attacked, in a way... then I do not see it as a compliment," Louboutin said at the time.

YSL's lawyers had previously argued that using the red sole for its shoes was not trademark infringement because "no designer should monopolize a color."

Louboutin rejected the Saint Laurent argument.

"I do not monopolize a color, I have put a color at a place where nobody has put it, and became, becoming iconic, as a trademark," he told "Nightline" in 2011. "I do not monopolize more colors, and Hermes is monopolizing the orange of their bag, or Tiffany has a blue. It's just the way it is. At one point, it makes part of your identity. It is my trademark."

The designer said he first came up with the idea for painting the sole red in 1992, when the prototype of a shoe he created came in, but seemed to be lacking something.

"I had a girl working with me, trying on the shoes," Louboutin said. "So when she was not trying on shoes, she sort of had nothing to do, so she was sort of waiting, and, so she was doing her nails, at that time... and I thought, why, this black has to be the red! So I grabbed her nail polish, and painted the soles."

It was then that his signature red sole was born. Louboutin said wearing shoes is a study in psychology. For women who may not feel comfortable with their bodies, in his shoes, he said, they will at least like their feet.

"I would say that a good shoe is exactly like a good wine," Louboutin said. "These shoes are going to stay and last for a long time."